Pound Dips On New Virus Strain, Post-Brexit Deal Worries
The pound drifted lower against its key counterparts in the
European session on Monday, as the outbreak of a new strain of the
coronavirus in the country forced the authorities to impose tighter
restrictions and the UK and the EU still failed to resolve
conflicts on key issues in order to agree on a trade deal before
the end of the year.
The British government on Saturday imposed tighter restrictions
on London and south-east England, warning that the new strain of
the virus was "out of control".
European countries have imposed travel bans on the U.K., while
other countries are expected to follow suit.
David McAllister, Chairman of the European Parliament's Foreign
Affairs Committee, said that it will not grant consent to an
agreement this year as the Sunday deadline was missed over the
The negotiations remained deadlocked due to an impasse over the
fisheries and level playing field between the two sides.
Investors are concerned over securing a deal before December 31
deadline, when the UK will leave the single market and customs
The pound depreciated to a 10-day low of 1.3215 against the
greenback, versus Friday's trading close of 1.3521. The pound is
seen finding support around the 1.31 level.
After touching a 6-day high of 139.00 in the previous session,
the pound weakened to a 10-day low of 137.03 against the Japanese
yen. Next key support for the pound is possibly seen around the
The pound was down against the franc, at a 10-day low of 1.1734.
This followed a 6-day high of 1.1893 set at the beginning of the
Asian session. Further fall is likely to take the pound to a
support around the 1.16 level.
The U.K. currency reached a 10-day low of 0.9217 versus the
euro, falling from a 6-day high of 0.9095 registered at 5:30 pm ET.
Should the pound slides further, 0.93 is likely seen as its next
Looking ahead, Canada new housing price index for November is
due in the New York session.
Eurozone flash consumer sentiment index for December is set for
release at 10:00 am ET.